The rewards and incentives industry has a colorful history, dating back to the early 1960’s. Since its initial inception, the rewards landscape has changed in more ways than one. When assessing your rewards program, it is helpful to understand where the industry has come from, where it is today, and how it will continue to evolve in the future.
In this blog series, we will provide you with the “need to knows” of rewards. Let’s begin with the initial onset of the industry. We like to call this era “Rewards 1.0.”
Rewind to the early 1960’s. This was the first time in history when the number of jobs exceeded the available labor pool. As a result, the economy was at full employment. In this era, employers seeking to retain their hard working employees began to “recognize and reward” for long-term service. This concept was developed in order to minimize employee turnover and to boost engagement.
Voilà…an industry was born!
Companies, including General Motors and IBM, presented employees with annual service and retirement awards including engraved watches, pins, and rings that often donned their company’s logo. These highly desired objects became symbolic in nature, and were often referred to as “symbolic recognition.” During the 1960’s, symbolic recognition grew rapidly in order to retain employees and reward them for their dedication and tenure. At the time, most employees were loyal to their employer, staying their entire careers in one organization.
This “Golden Age” of employment was short lived.
The 1970’s brought massive economic upheaval starting with the Oil Crisis, leading to rapid inflation, high interest rates, major layoffs, and ongoing recessions. In spite of these obstacles, symbolic recognition persevered and became a valuable tool to help motivate and engage a broader group of stakeholders, including: management and office teams, production plant employees, sales teams, and even customers.
Continuing throughout the 1980’s, in spite of massive unemployment rates, employers continued to expand their use of symbolic rewards. Nothing epitomized this better than the gold watch! These valuable rewards became the badge of honor in this era. Employees proudly wore their badges, making these rewards highly sought-after by the hard-working labor force of the day.
In 2016, the notion of staying at one employer for 25-50 years is a rarity. On average, employees clock 4.6 years of tenure at organizations today. Based on these figures alone, the change in workforce mentality is drastic! These changes to the world economy and demographic profiles of workers helped to usher in Rewards 2.0.
Be sure to catch our next blog, focusing on the era of Rewards 2.0!